National franchises work against communities

A fight is brewing in Congress over COPE, a new telecom bill that seeks to create national franchise agreements for video. As the phone companies try to get into the video services marketplace, they are at a severe disadvantage--the cable companies have had decades to negotiate local cable TV franchises. For every community the phone companies want to approach with video, they have to negotiate a franchise, which can take six months to a year.

If you don't think about it very much, a national franchise seems to make sense; we all want more competition in the telecom marketplace, and so one way to achieve that is to reduce the amount of legal paperwork needed. But there are so many things wrong with this bill, on both sides, that it is hard to list them all. But I'll try:

• Franchises as we know them are dead. The problem I have with cable franchises is that they have never had much of a direct relationship between the real cost of managing community right of way and what the companies are charged. This is problematic. Companies that use community infrastructure like right of way should pay for that privilege, but the franchise fee needs to be tied to real costs, not just "we'd like some money, so please tax your customers on our behalf."
• The Internet has severed the connection between infrastructure and service, so why are we even talking about this? A company in California (e.g. Disney) can sell video programming (known as "TV") to me in Virginia without ever having a physical presence in the state. So why should some companies pay and other get away scot free? This is also known as the "satellite TV provider argument."
• Some opponents of COPE oppose it because it may cause funding problems for community television. And it may, because franchise fees have often been used to fund community television. But if community television is a good thing, it is a good thing whether or not franchise fees are there to support it. Expecting one or a few companies to collect taxes for the community television station but not others is a bad strategy.
• Trying to preserve old, analog-based community television is just as wrong as trying to preserve old, pre-deregulation franchise fees. Community television is poised for a renaissance (expanded programming, more variety, more viewers) if it makes the jump to broadband, but that means letting go of the old, broadcast/cable TV distribution model.

Part of the confusion about all this is a stubborn refusal by Congress and state legislators to have an honest and informed discussion about the rights of communities to determine their own economic destiny. Telecom companies that want to use community right of way should pay the true cost of that service, so in that sense, I support franchise fees vigorously (but I think we need a new name for them).

But legislators often look for simplistic solutions to complex problems, or inversely cook up complex solutions to simple problems. There is a little of both going on here, and communities are being left out. National franchising will inevitably lead to national franchise fees, with a single check written to the Feds, rather than the community. This is bad, bad, bad. Communities will be forced by the Feds to provide right of way access but will likely see very little of the franchise fee. And we'll have a new Federal bureacracy--the Federal Bureau of Community Right of Way.

Communities have to start today, build their own infrastructure, manage their own right of way, and take control before all is lost. Communities without a right of way and franchise fee strategy will be the biggest losers.